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Would Lower Statutory Royalty Rates Help or Hurt Artists?

There is currently a big debate going on in the music industry regarding the per-stream royalty rate paid by Internet radio services. On one side of the ring we have Pandora, an Internet radio company whose following just hit over 200 Million registered users in April of 2013. On the other side of the debate we have SoundExchange, who is a non-profit (PRO) Performance Rights Organization. Sound Exchange is responsible for collecting statutory royalties from Internet radio, satellite radio, cable TV music channels and any other platforms that stream sound recordings. On their side of the ring is also The Recording Academy. They are an organization composed of recording engineers, producers, musicians, and other music industry processionals. Their mission statement, as it reads on their website, is “to positively impact the lives of musicians, industry members and our society at large”.

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According to Pandora, their goal is to promote more established and up-and-coming artists. Pandora says they will benefit from getting their music out to a broader audience. They are currently seeking signatures from artists and musicians, for a letter of support for a petition to do so. However, to accomplish this goal they would have to lower the per-stream royalty paid to artists and musicians.

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Pandora is also working on an “artist dashboard” that will give them the capability to see the activity of their songs, including where their songs are being streamed in the country. This has been a request by many artists and musicians for some time now and Pandora will be the first of its kind to provide this type of tool. This will help artists and musicians to take advantage of the marketing and promoting of their music.

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On the other hand, SoundExchange and The Recording Academy, among many others believe lowering the per-stream royalty would not help, but actually hurt artists and musicians. They feel that the large and growing revenue stream for many artists would decrease significantly. These organizations reacted to Pandora’s outreach by emailing their artists to educate them about the legislation and emphasize that the bill would actually lower rates paid by statutory services. They feel that the only party who would benefit from lowering the statutory rates would be Pandora and other similar organizations. They see this debate to be the same as in Terrestrial radio, who has been trying to accomplish the same goal for years and have been making the same arguments. They feel that it’s just a way for companies like Pandora to piggyback on the works of artists and musicians and not pay a fair price for it.